Canada’s Oil Pivot to Asia Is Starting to Materialize

Canada's oil industry is expanding its reach beyond the United States as it begins to send more crude to Asian markets. The country's Trans Mountain pipeline recently reached full capacity for the first time in June, with the operator already planning an additional 300,000 barrels per day of capacity. Most of this new capacity is expected to head across the Pacific Ocean.

Currently, the pipeline moves 890,000 barrels per day from Alberta to British Columbia. The company plans to add 90,000 barrels per day in the fourth quarter, followed by another 210,000 barrels by the end of 2028, bringing total capacity to around 1.19 million barrels per day. About two-thirds of tankers leaving the Westridge Marine Terminal head to Asia, according to Trans Mountain CEO Mark Maki.

China is the largest customer, with India, Japan, South Korea, and Vietnam also expected to buy Canadian crude. The Iran war has added another reason for buyers to seek out Canadian oil, as it no longer has to pass through the Strait of Hormuz. Canada is producing enough oil to make the extra pipeline space useful, with output expected to exceed last year's record 5.3 million barrels per day this year.

For decades, most of Canada's exports ended in the United States, with roughly 4 million barrels per day shipped south to Midwest and Gulf Coast refineries. However, Trans Mountain opens the door for additional buyers, providing more destinations for Canadian producers to sell their oil once inventories return to normal. Canada announced plans in July for another Alberta-to-Pacific pipeline, and Trans Mountain's expansion is arriving much sooner.

The first 90,000 barrels per day is scheduled to begin this year, with another 210,000 barrels following by the end of 2028.